The Ministry of Energy of Indonesia plans to change the terms of future oil and gas production sharing contracts (PSCs), to replace the existing cost-recovery system with a new framework. In the new contract model, contractors would support the cost of exploration and production, rather than be reimbursed by the government. Existing PSCs would not be changed.
Indonesia will determine a base split in revenues between the government and contractors, depending on various criteria, such as field location to reflect higher production costs or the amount of local content used for the project. The country expects to attract new investors to boost the development of new fields.
Indonesia's crude oil production has been declining since the mid-1990s, posting a decrease of more than 40% between 2000 (72 Mtoe) and 2015 (40 Mtoe). Gas production, which grew between 2000 and 2005, has been contracting since then, down to 42 Mtoe in 2015.
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